Medicare’s value-based purchasing fail?

Value-based payment is the latest hot topic. One question remains, however, does it work? Does paying for quality improve quality. A study by Zuckerman et al. (2016) finds that the hospital readmissions reduction program (HRRP) did appear to reduce re-hospitalization rates among the targeted conditions.

What about the hospital value-based purchasing program (HVBP). Beginning in fiscal year 2013, the Affordable Care Act mandated that Medicare payments to acute care hospitals be tied to some performance metrics. Initially the incentive payment was 1% of total reimbursement, but by FY2017, this figure has climbed to 2%. A question is, did HVBP improve patient outcomes?

Our results are consistent with those from studies that have shown that HVBP did not increase quality with regard to clinical process or patient experience in its first 9 months 15 and more recent research indicating that HVBP did not reduce mortality over the first 30 months of the program.

The authors reached this conclusion by running a difference-in-difference analysis of acute care hospitals. They compared differences in these key outcomes before and after the implementation of HVBP for acute care hospitals subject to bonuses and penalties and compared them against critical access hospitals (CAH), which were not subject to the HVBP financial incentives.

What would have worked? To be honest, that is not known. However, the authors hypothesize that:

…alternative incentive designs — including those with simpler criteria for performance and larger financial incentives — might have led to greater improvement among hospitals.

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1 Comment

I’m sorry, I haven’t read the whole entire paper, but from my understanding, Critical Access Hospitals are Medicare-subsidized hospitals in rural areas, just so everyone will have access to some hospital within some distance. Because of that, wouldn’t they handle only the easier patients, since sicker patients will likely get transferred to larger hospitals in a more urban area? That study seems like a poor way to compare HVBP performance.